China’s Macau Gambling Region: The Growth Opportunity
Spain just rejected a massive $30.0-billion proposal from Las Vegas Sands Corp. (NYSE/LVS) to build a casino and entertainment resort near Madrid. The project would have been significant, with 12 hotels, six casinos, and many other amenities injecting some life into the stagnant country where the unemployment rate sits around 26%.
Now, the Spanish government had its reasons to turn down the deal; they centered largely on the associated activities that could surface when casinos and gambling arose. The same thing occurred in Toronto Canada, in which a $5.0-billion casino hotel project was also rejected.
But as is usually the case, a region’s loss is another area’s gain. Casino operators are always looking for growth and much of it has been focused on emerging markets outside of Las Vegas and the United States, in areas such as Asia and, more specifically, China where there is incredible wealth being created. But whether or not you like the casino industry and for whatever reasons, there will always be regions around the world that will welcome multibillion-dollar investments.
At this point, the top destination for casinos is Asia, or more specifically, the Macau region in China, which the Chinese government has supported as a region for gambling. China has designated economic development zones across the country and Macau has been designated a special administrative region for legalized gambling to attract the newfound wealth. (Read “China’s Expected Baby Boom a Boon for U.S. Business.”)
Make no mistake about it: Macau could eventually become the most sought-after region in the world for casino operators.
After its rejection in Spain, Las Vegas Sands shifted its capital and sights to adding more casino space in Macau. Having been to Macau, China, I have to say it’s truly a place to visit. The region combines the old world charm of this former Portuguese colony and the modern push by China to develop the “Vegas of the Orient” and attract money.
We've uncovered footage of a classified government facility. "Site M" is located 31 miles from the White House, next to the NSA building. It's almost half the size of the Pentagon... And it's where Obama is mobilizing the "6th Branch of the Military." One with cutting-edge technologies and sophisticated weapons at its disposal. The kind that could destroy ISIS, Putin, and China in one fell swoop. Sound hard to believe? Take a look for yourself. In fact, what's going on inside this war facility could change the way you see our government...and the way you look at America's military and war itself. Click here to see it now.
In the region, you have the old established casino areas, but there has been a major push over the recent years to build new colossal casinos and hotels in the Cotai Strip in Macau.
If you want to bet on the growth in Macau, and the Cotai Strip in particular, the two key players to watch are Las Vegas Sands and China-based Galaxy Entertainment Group Limited (OTC/GXYEY).
Las Vegas Sands, via its Sands China Ltd. subsidiary, currently owns four properties in the Cotai Strip, where it attracts tens of millions of visitors. The growth for Las Vegas Sands has been impressive there, with revenues in the billions per quarter.
Chart courtesy of www.StockCharts.com
Galaxy Entertainment is also an aggressive player in the region, with two core properties—Galaxy Macau and StarWorld Hotel and Casino—currently operating in the area. The company is set for more expansion at these existing developments.
Two other players with a smaller presence in Macau, China may be more familiar names: Wynn Resorts, Limited (NASDAQ/WYNN) and MGM Resorts International (NYSE/MGM).
If I was a betting man, I would put my money on Macau as the big-growth buying opportunity in the casino space for the next decade.